Citizens Insurance seeks to fill adjuster void
Disappointed with the turnout of independent insurance adjusters beforeHurricaneMatthew last October and to a new contract solicitation this month, Citizens Property Insurance Corp. is trying again to secure the number of adjusters it thinks it will need after the next hurricane.
The state-run “insurer of last resort,” which has 223,000 policies in Broward, Palm Beach and Miami-Dade counties, sent out another solicitation onWednesday in hopes of increasing the number of adjusters available for damage assessments after hurricanes or other catastrophes.
The company realized last fall that it had a problem.
AsHurricaneMatthew approached South Florida last October, Citizens turned to four firms thatwere contracted to provide 2,441 adjusters on demand. EstimatingMatthewwould generate 75,000 damage claims, Citizens asked the companies to deploy 624 adjusters but got 279.
As it turned out, Matthew largely spared South Florida. Later, Jay Adams, Citizens’ chief claims officer, acknowledged the adjuster shortfallwould have caused the company serious problems.
Citizens terminated its contracts with the four adjuster firms and in April solicited new contracts, hoping to secure commitments for 1,500 adjusters. Instead, it got commitments from12 companies for 496 adjusters, forcing the company to develop a strategy to deploy its entire adjuster force in case of a catastrophe. Before contracts with the 12 new firms take effect Aug. 1, Citizenswill have get through the next fiveweeks of the hurricane season relying on four firms that remain active under a 2015 contract.
The new solicitation, sent to 11,000 firms across theU.S., again seeks 1,500 adjusters, Citizens spokesman Michael Peltier said. The deadline to respond is July 13, and a Citizens evaluation committee is scheduled to meet Aug. 2 to select firms to recommend for contracts.
Citizens’ Board ofGovernors would have to approve contracts, possibly in a conference call, before any new adjusters could be deployed, Peltier said.
Having a sufficient number of adjusters is a vital component of an insurer’s ability to respond to policyholders. AfterHurricane WIlma caused widespread damage in 2005, Citizens deployed nearly 2,000 adjusters to assess more than 123,000 claims over the following month, according to a published report. Still, customers filed hundreds of complaints about delays getting adjusters to their properties. During Tuesday’s Board of Governors meeting, Adams said he planned to ask adjustment firms why they failed to bid on the April contract.
One of Adams’ staff members reached out to several adjusters by phone, Peltier said.
“One recurring theme is that vendors are concerned that they cannot meet the minimum commitment during a [catastrophe event]” and did notwant to be subject to fines by Citizens, Peltier said. “This again points to a shortage of [catastrophe] adjusters in the workplace.”
Amid almost a decade without a hurricane making landfall in Florida, the number of state-certified independent adjusters declined from 29,022 in 2011 to 11,948 currently, according to state data.
Another issue is that national adjustment firms that bid on catastrophe contracts alsowant to be assigned enough day-to-day, noncatastrophe claims to justify keeping a core number of adjusters in the state, he said.
But because Citizens claims counts have declined as two-thirds of the company’s policieswere absorbed by private-market insurers over the past five years, adjuster firms knowCitizens cannot feed them enough day-to-daywork, Peltier said.